Instant Asset Write Off
Royal Assent was given on 6 April 2019 to the amended Instant Asset Write Off legislation.
What does this mean?
The Instant Asset Write Off allows business to bring forward depreciation and claim the purchase cost in full in the year it has been purchased (assuming its cost is less than the maximum limit depending on the period it was purchased). So instead of claiming between 15% – 66.6% each year until its value is nil, you claim 100% in year 1 of the asset.
The instant asset write-off now also includes businesses with a turnover from $10 million to less than $50 million.
How much and what period?
|Date range||Threshold for Each Asset|
|7:30pm (AEDT) 02/04/2019 to 30/06/2020||You can immediately deduct the business portion of most depreciating assets costing less than $30,000 each|
|29/01/2019 to before 7.30pm (AEDT) 02/04/2019||You can immediately deduct the business portion of most depreciating assets costing less than $25,000 each|
|7.30pm (AEST) 12/05/2015 to 28/01/2019||You can immediately deduct the business portion of most depreciating assets costing less than $20,000 each|
|01/01/2014 to prior to 7.30pm (AEST) 12/05/2015||$1,000.00|
|01/07/2012 to 31/12/2013||$6,500.00|
|01/07/2011 to 30/06/2012||$1,000.00|
How much can I claim?
First of all, if you use the asset for private use at all, you will need to work out that amount or percentage and subtract that portion. The remainder (cost – private use) will be considered the taxable component and is deductible. Private use is not deductible.
Note, while the taxable component is deductible, the entire cost of the asset cannot exceed the threshold.
Also, if you are not registered for GST, then the entire cost of the asset cannot exceed the threshold. But if you are registered for GST, then the entire cost cannot exceed the threshold + GST as the cost for taxation purposes is the net value (Total cost – GST indicated on invoice).
Additionally, if you later sell or dispose of the asset for which you claimed an instant asset write-off, you include the taxable portion of the amount you received in the sale of the asset, in your assessable income. This is because you have already taken depreciation into account, so the entire sale value (less GST if applicable) is the gain on disposal.
Exclusions – What you cannot claim
The following assets are specifically excluded from the simplified depreciation rules and therefore the Instant Asset Write-Off however, you can use the general depreciation rules to claim a deduction for the following depreciating assets:
- capital works (such as landscaping, renovation improvements, etc)
- assets you allocated to a low-value pool before using the simplified depreciation rules
- software allocated to a software development pool (but not other software)
- assets that are leased out, or expected to be leased out, for more than 50% of the time on a depreciating asset lease
- horticultural plants including grapevines
- a new car for family (that is not used in business)
If you would like to purchase a motor vehicle for business purposes, there may be other implications you will need to consider such as Fringe Benefits Tax and GST. Chat to the Accountants at GJ North & Associates on 08 9434 9035 for more detailed information re motor vehicles, FBT and other implications.
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a licensed BAS or Tax practitioner.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nationwide Bookkeeping & Accountants Services Pty Ltd’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.